High Speed Rail - Transport Committee Contents


Written evidence from the Northern Way (HSR 133)

SUMMARY

This submission sets out the Northern Way Transport Compact's evidence on high speed rail. The Northern Way was the public and private sector partnership funded by the three Northern RDAs that promoted the North's productivity and output growth and closed at the end of March 2011.

The Northern Way Transport Compact has concluded that:

—  Set in the context of a national rail investment strategy, high speed rail will bring substantial and worthwhile transformational economic benefits to the North and to the nation.

—  The Government's benefit assessment is conservative and that, in reality, benefits will be significantly greater than the £44 billion calculated for the Y shaped network.

—  Agglomeration benefits at over £6 billion are an important part of the Government's benefits assessment. The Northern Way's evidence is that proportionally, the North's economy will receive a greater agglomeration uplift than that in London and the South East.

—  High speed rail will create the circumstances to accelerate the North's economic growth and will help rebalance the economy North South.

—  While the Government has not quantified the impacts of high speed rail on the size of the economy measured by Gross Value Added, the Northern Way's assessment is that these could be a multiple of the £44 billion in economic benefits quantified to date.

—  The greatest economic benefits come from a network approach that brings major cities closer together and spreads prosperity across regions.

—  A north-south high speed rail network that serves both sides of the Pennines is needed. The proposal for a Y-shaped network substantially meets this need.

—  The North's economy will benefit from direct high speed rail services to Central London and Heathrow and a network with a direct link to HS1 and the Channel Tunnel, both provided by the Government's Y-shaped network.

—  The greatest economic gains will come from serving city centres, linked with complementary economic development and land use master planning and strengthening of local transport networks.

—  HS2, the high speed line from London to the West Midlands should be the first phase of the national network.

—  Progressing the eastern and western limbs of the Y-shaped network in parallel, with completion in 2032-33 as the Government suggests in its consultation, will help minimise any competitive disadvantage between regions.

—  To provide benefits to the east side of the Pennines in 2026 the Government should consider a link between HS2 and the Midland Main Line enabling access from Yorkshire and the Humber and the North East to London Euston and to destinations served by the proposed station at Old Oak Common, including Heathrow.

—  The Government should consider the case and timing of extensions of the Y shaped network north of Leeds and Manchester to serve the North East and Scotland directly by new lines, as further developments of the national high speed rail network.

—  A faster, modern electrified route is needed across the Pennines—the key route in the North that will not benefit directly from the Government's high speed rail proposals. This would build on the benefits to the North of the Northern Hub Strategy which must be delivered as a priority, in full by 2019.

—  There also remains a pressing need for medium term investment in the existing classic north south main lines—the East Coast Main Line, Midland Main Line and West Coast Main Line—pending the completion of the Y shaped high speed rail network in 2032-33.

THE NORTHERN WAY TRANSPORT COMPACT

1.  This submission sets out the Northern Way Transport Compact's evidence and position on high speed rail which it has developed over the last five years.

2.  The Northern Way was the public and private sector partnership funded by the three Northern RDAs that closed at the end of March 2011. The Northern Way Transport Compact's remit has been the identification of the transport priorities that will maximise the North's economic growth whilst minimising the impact on the environment. As part of its work, the Transport Compact has helped the North establish a broad consensus around the case for high speed rail.

3.  As described by the Independent Evaluation of the Northern Way (April 2011), the Northern Way Transport Compact has "coordinated across a range of partners in the North, providing a forum for discussion of evidence versus parochial interests and allowing transport experts to talk to politicians." The Independent Evaluation also concluded that the Transport Compact has "produced a clear and consistent approach to influencing transport policy and was arguably the star performer of the Northern Way with demonstrable benefits … The influencing and advocacy on transport was built on the evidence base, focusing on the links between transport and economic development in the North." The Independent Evaluation further concludes that "the lesson for the North going forward would be to ensure that there is a body which exists to enable the agreement of a joint position on priorities for investment in transport schemes—this consensus is valued by government. This needs to be achieved in a relatively short timeframe otherwise opportunities for future transport investment in the North will pass by."

THE STRATEGIC DIRECTION FOR TRANSPORT

4.  The Northern Way Transport Compact's Strategic Direction for Transport is an evidence-based assessment of the most appropriate transport interventions that will promote productivity gain, while at the same time seeking to protect and enhance the North's natural and built environment, and contributing to the nation's commitments regarding climate change. Looking over 20 to 30 years, it sits above the level of individual priority schemes and projects. The Strategic Direction sets out the types of interventions which will have the greatest productivity impact, as well as where in the North those interventions will have the greatest impact.

5.  A key conclusion of the Strategic Direction for Transport is that a balanced investment strategy is needed that considers transport links within and between the North's city regions, and between the North and the rest of the country, especially central London and Heathrow.

THE NORTHERN WAY'S SHORT, MEDIUM AND LONG TERM TRANSPORT PRIORITIES

6.  Having established the Strategic Direction for Transport, the Northern Way Transport Compact then identified Short, Medium and Long Term Transport Priorities. The prioritisation work shows that while the transport proposals being pursued by stakeholders across the North will make worthwhile contributions to productivity growth, taken together they do not allow the Strategic Direction for Transport to be met. Consequently, if the North's productivity growth is to be maximised a number of the "Strategic Delivery Gaps" need to be addressed. The Transport Compact identified strategic delivery gaps for the rail network, the road network and associated with network integration. The rail gaps are the Northern Hub (the strategy to transform rail in the North), rail gauge enhancements for multi-modal container traffic, a rail rolling stock strategy and strategies for trans-Pennine and north-south rail (including high speed rail). The road gaps relate to the need for a long term strategy to keep the strategic road network moving and a north-wide approach to behavioural change. For network integration the strategic gaps relate to pan-Northern smart ticketing and strategic park and ride.

THE STRATEGIC CASE FOR HIGH SPEED RAIL

1.  What are the arguments for High Speed Rail?

7.  High speed rail is a once in a generation opportunity to transform the economic prospects of the North. Work published by the Northern Way in March 2011(Transforming Our Economy and Our Connectivity: High Speed Rail for the North—Issues and Evidence in Response to the Government's High Speed Rail Consultation available at www.thenorthernwaytansportcompact.com) identifies that the case for high speed rail to serve the North is straightforward. This is because:

(a)  Links between the North and the World City functions in London (as well as links between the North's city regions) are of fundamental importance to the Northern economy and its productivity.

(b)  North south links, particularly to London, will become more, not less, important over time. There is no question that new north-south capacity will be needed, only when it is required and what form it should take.

(c)  The existing road and rail networks linking the north and south have finite capacity and they will become increasingly congested and journeys will become extended and more unreliable. There is no prospect of any significant increase in north-south road capacity. The future strategy for the motorway network is focussed on managing congestion.

(d)  Air links between the North and London are increasingly under threat. Now only Manchester and Newcastle airports have links with Heathrow. Constrained capacity at Heathrow will amplify the commercial pressures on these links in coming years.

(e)  There are worthwhile and value for money proposals for increasing north-south rail capacity on the existing main lines and these should be pursued. However, the capacity increment that such enhancements will bring is finite and not sufficient to meet the needs of the North's economy if it is to grow to its full potential. Any further capacity increases would be highly disruptive to implement, as well as being very costly.

(f)  The most cost effective way to provide the north-south capacity that the North requires is to build new railway lines. The extra benefits that come from operating this new capacity at high speed transform the economic and productivity benefits that the new capacity will deliver.

(g)  If high speed rail is judged not worth proceeding with, the consequence will be demand well in excess of capacity. This will inevitably lead to ever increasing real-term fare increases as a demand management tool, to the economic detriment of the North.

2.  How does High Speed Rail fit with the Government's transport policy objectives?

8.  Speaking in Shipley at the end of May in his first major speech as Prime Minister, David Cameron identified the Coalition Government's goal of rebalancing the economy away from the heavy reliance on the South East, and through the growth of private sector businesses.

9.  As set out in written evidence and debated at an oral session of the Transport Select Committee's Transport and the Economy Inquiry, the Northern Way Transport Compact's evidence shows that what is needed to foster the North's economic growth is a balanced approach that looks at the connectivity needs of travel within city regions and the links between the North's city regions. Also important are links between the North and London with its World City functions, and international connectivity via gateways within the North and elsewhere in the country including Heathrow. Enhancing connectivity within city regions is focused on expanding labour supply across functional labour markets. Improving the connectivity between city regions facilitates the movement of goods, business to business links and allows the expansion of labour markets, most notably for entrepreneurial high level skills. International connectivity facilitates trade.

10.  The Northern Way Transport Compact has been mindful of the time taken to develop significant transport interventions, the importance of bringing forward investment proposals in a timely manner and the importance of the development of long term plans as well as the phased delivery of transport priorities in the short and medium term. The Northern Way Transport Compact's priorities align with the five year control periods (2009-14, 2014-19 and 2019 and beyond) and have to date received substantial backing by Government. The Transport Compact's Priorities for the North's Strategic Networks involve:

2009-14: Additional Rail Rolling Stock; North West rail electrification (committed); start of work on Northern Hub delivery (committed); rail gauge enhancement of the routes from Doncaster to the West Midlands and Doncaster to Edinburgh and Glasgow) and linking in the Tees, Tyne and Humber Ports (committed except for linking in the Humber Ports); Managed Motorway projects on key congested sections in the North (committed).

2014-19: Further rail rolling stock; completion of the Northern Hub Strategy; electrification and gauge enhancement between Manchester, Leeds and York; interim improvements to the East Coast, Midland and West Coast Main Lines pending high speed rail; gauge enhancement between Doncaster and the Humber Ports; further Managed Motorway investment and targeted improvements to road access to the Ports of Immingham, Hull and Liverpool.

2019 and beyond: Further rail rolling stock; delivery of the Y shaped high speed rail network; and longer term solutions to the management of motorway congestion (including consideration of the role of charging).

11.  A widely held criticism of the previous Government's 2007 Rail White Paper has been that it lacked clear medium and long term components. This needs to be fully addressed when the Coalition Government publishes its high speed rail strategy at the end of 2011 and its Transport White Paper and High Level Output Statement in summer 2012.

3.  Business case

12.  Nationally, the number of trips made by rail is now higher than at any time in peacetime since the 1920s. The last 10 years have seen strong, sustained growth in long distance rail travel. Notably, and in contrast to traffic on the national motorway network and domestic and international air travel, long distance rail travel continued to grow through the recession.

13.  Past investment has not kept pace with the growth in demand. If new capacity is not provided and demand is constrained, it is evident that the North's economy will suffer. Expanding the capacity of the road network to provide for the growth in north-south demand would be prohibitively expensive and environmentally unacceptable. Air travel is not a viable alternative. Greater north-south rail capacity is needed to support and facilitate the growth and re-structuring of the North's economy. Upgrading existing lines would be expensive and very disruptive over a long period, as well as offering only a limited capacity increase. The optimal way to increase the capacity of the north south rail network is by building new lines.

14.  Faster journeys by high speed rail will support the growth of the North's economy in two ways:

(a)  It will make the existing economy more productive and provide economic benefits to non-business users.

(b)  It creates the opportunity to support the further economic growth and regeneration of the North and the re-balancing of the economy from the South and away from the public sector.

15.  If high speed rail is judged not worth proceeding with, the consequence will be demand well in excess of capacity. This will inevitably lead to ever increasing real-term fare increases as a demand management tool, to the economic detriment of the North.

4.  The Strategic Route

16.  The Government's proposal for a Y-shaped national network substantially meets the Northern Way Transport Compact's evidence-based position that there is a need for a north south high speed rail network that serves both sides of the Pennines. In addition, the Northern Way Transport Compact has also considered it clear that any national network will be implemented in phases. The case for the London to West Midlands line being the first phase of the national network, followed rapidly by the full build out of the Y shaped network, is overwhelming.

17.  The Northern Way Transport Compact has however also concluded that:

(a)  There remain opportunities both to increase the economic and productivity benefits that high speed rail will bring to the North, as well as to bring forward the date when these benefits will be enjoyed. These need to be explored as the Government develops its end of year strategy and include a link between the HS2 and the Midland Main Line in order to provide benefits in 2026 to the east side of the Pennines at that date.

(b)  Further work is warranted to examine the case for northward extension of the dedicated high speed network beyond Manchester towards Glasgow and beyond Leeds towards Newcastle and Edinburgh.

18.  In regard to Heathrow, the Northern Way Transport Compact agreed with the conclusions of the Mawhinney Review and the Government about the timing of serving Heathrow Airport directly and that passive provision for a high speed link to Heathrow should therefore be constructed as part of the first phase.

19.  Intermediate destinations between London and Birmingham would be best served by development of services using capacity freed up on the West Coast Main Line.

5.  Economic rebalancing and equity

20.  The Northern economy is underperforming when compared with the more prosperous regions in the South. On a per capita basis, Gross Value Added in the North is 80% of the South East.

21.  As the North's economy grows and as it restructures, north-south links, particularly to London will become more, not less important over time in economic terms. London is a World City and global financial hub and as such offers financial, legal and other services essential to businesses in the North. Economic growth in the North will increase demand to access the internationally renowned services that London offers, not diminish it. On top of this, by virtue of its size and wealth London and the South East is the largest domestic market for the North's businesses and, of course, as the nation's capital it is the home of government.

22.  The Northern Way Transport Compact has identified that a north-south high speed rail network serving both sides of the Pennines has the potential to generate agglomeration benefits through linking the northern city region economies. In analysis pre-dating the Government's identification of the Y-shaped network as its preferred way forward and for a more extensive network, these agglomeration impacts are valued at £13 billion PV, (using the Department for Transport's current methodology). Of this £13 billion, £5 billion is in the North of England. Proportionally, the North's economy receives a greater uplift than that in London and the South East.

23.  Work looking at agglomeration impacts has also been undertaken by 4NW, the former local authority leaders' board for the North West as well as by a consortium of the Leeds and Sheffield City Regions. This work also identifies substantial agglomeration benefits for the North. For the preferred Y-shaped network, analysis for 4NW identifies that it would result in productivity benefits of £1 billion a year by 2030, of which 20% would accrue to the North West. The work for the Leeds and Sheffield city regions identifies that a high speed link between the two city regions and London could deliver productivity gains of at least £1.2bn PV to the two city regions.

24.  The Department for Transport's own assessment is also that high speed rail will generate substantial agglomeration benefits. Around 15% of the economic benefits that HS2, the line from London to the West Midlands, will generate are associated from agglomeration and a further 5% from addressing imperfect competition. Together wider impacts result in £4 billion PV worth of benefits. Looking at the Y-shaped network, this figure increases to £6.3 billion in total.

25.  When considering Department for Transport's figure, it is important to note that for their assessment of the wider impacts of the lines beyond the West Midlands to Leeds and Manchester, they have used a "rule of thumb" approach and consequently have adopted a very prudent assumption on the size of the benefits. Evidence from the Northern Way, 4NW and the Yorkshire authorities all suggests that full application of the wider impacts methodology would result in the Y returning substantially greater wider impacts than currently conservatively assessed by the Department for Transport.

26.  However, the principal benefit of high speed rail identified by stakeholders across the North and by the Government is that it will also stimulate a change in the structure of the economy and that it will increase Gross Value Added (GVA). Such transformational changes will happen because high speed rail will support and facilitate growth of employment in the most productive locations (which are in and around city centres). It will also support employment growth in the most productive sectors of the economy. These GVA benefits do not form part of HS2 Ltd's value for money assessment.

27.  Techniques to quantify the impacts of transport investments such as high speed rail on the size of the economy are in their infancy. Given the Northern Way Transport Compact identified the criticality of transport connectivity to the North's economic growth and the important potential impacts of GVA analysis on funding availability and scheme prioritisation, we commissioned the Institute for Transport Studies (ITS) at the University of Leeds to review the methods that have been developed to assess the GVA impacts of transport investment. A Northern Way sponsored study by the Spatial Economic Research Centre at the London School of Economics has also modelled the GVA uplift of rail journey time improvements.

28.  Collectively, the Northern Way Transport Compact's review of work that has been done to look at the impacts of major transport investments suggests that GVA benefits could be up to three times the size of welfare benefits assessed in a conventional cost benefit appraisal. For this potential to be realised, the Northern Way Transport Compact has acknowledged that further investments may be needed which could be in complementary transport enhancements, for example to local public transport networks serving a high speed rail station or it could be in sites and premises or skills and training. This evidence is further demonstration of the transformational potential of high speed rail.

6.  Other Impacts

29.  By relieving the capacity constrained classic north south main lines (the West Coast Main Line, Midland Main Line, and East Coast Main Line) the Y shaped high speed rail network will deliver benefits for the north's economy by creating the opportunity to enhance local commuter and inter-regional services and to release additional capacity for growth of rail freight.

30.  High speed rail will also contribute to meeting the nation's obligations to reduce carbon emissions. Analysis by ATOC for Greengauge 21 shows that with load factors similar to those currently experienced on the Eurostar services between London and Paris and London and Brussels, high speed rail already has lower carbon emissions per passenger mile than existing inter-city trains, domestic aviation or cars. High speed rail's per passenger mile emissions will fall further as technological advancement (eg use of lighter materials in train construction, more efficient motive power) will lower per passenger mile emissions. The progressive de-carbonisation of electricity generation will also reduce further high speed rail's carbon emissions per passenger mile. When considering carbon emissions, high speed rail currently has and will maintain a clear advantage over alternative modes.

May 2011


 
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© Parliamentary copyright 2011
Prepared 8 November 2011